DUTCH navigation and digital mapping group TomTom reported a surprise first-quarter profit on Friday (Apr 14) helped by cost controls and sales growth in its location pin-pointing and automotive markets, sending its shares up 8 per cent.

TomTom, which counts Volkswagen, Renault and Microsoft among its clients, had been hit by soaring inflation and the global chip shortage that disrupted the automotive and electronics industries.

But the Amsterdam-based company said operating expenses declined year-on-year in the first quarter, helped by the reorganisation of its maps business announced last year.

“The decrease mainly reflects efficiency gains realised in the research and development activities for our geographic data,” TomTom said.

The company reported an operating profit of 2.6 million euros (S$3.8 million) in the first quarter. Analysts polled by the company had forecast a loss of 12 million euros. It had posted a loss of 19.8 million euros a year earlier.

“First quarter results good. Solid growth while maintaining cost control,” Oddo BHF analyst Wim Gille said in a note to clients. He said TomTom’s operating expenses were 3 per cent lower than analysts’ consensus.

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“Operational progress showing good traction of the new Map making platform,” Gille added.

TomTom said its automotive division’s operational revenue rose 22 per cent in the quarter, outperforming car production growth in its core markets. Its biggest location technology unit also continued to gain momentum.

The group’s revenue rose 10 per cent to 141 million euros against analysts’ estimate of 132 million euros, driven by 12 per cent growth in location technology and 34 per cent growth in automotive.

“Supported by growing revenues, we expect to generate positive free cash flow in the range of 0 per cent to 5 per cent of group revenue this year,” finance chief Taco Titulaer said.

The group reiterated its revenue guidance for the year. REUTERS